In his first interview as Cushman & Wakefield’s new head of London markets, Digby Flower talks to Stacey Meadwell about his ambitions for the company in the capital.
Watch out London agents, Cushman & Wakefield’s new head of London markets, Digby Flower is a man on a mission. Flower joined the firm earlier this month after 17 years with rival CBRE, and his aim is growth. At the end of 2011 Cushman finished fifth in EGi’s London Offices Market Analysis central London league table, nearly 1.5m sq ft worth of deals behind leader Jones Lang LaSalle.
“Cushman is number one in New York and not where it should be in London. It has been on a growth trend, and the idea is to accelerate and spearhead that, taking Cushman’s into the top three,” he says.
And the timeframe for this? “I think three years is a sensible timeframe,” is the confident reply.
Flower is not the only new blood to join the firm’s London team this year. Andrew Parker, also from CBRE, will head the City agency team, and James Meikle is returning from Cushman’s Milan office to join George Robert’s tenant representation team in the City.
If Flower’s mission (he prefers that word to vision) is to be realised there will be more recruitment. He talks of a triangle structure of agency, development and investment, three business fundamentals that feed off each other.
“There are some other moves that we need to make to put the right people within that structure and accelerate the growth of the business,” he says.
In terms of agency share by sub-market, Cushman is strongest in Midtown and the South Bank, and does not make it into the top five for either the West End or City, according to EGi data.
But in order to move up the rankings, there needs to be deals, and Flower has a plan there too. “The TMT sector is growing in London, and what is one of the core strengths of Cushman’s business but the TMT sector. The knowledge comes from the people that work in the field on both the east and west coasts of America and the Cushman-client relationship with those companies,” he says.
Flower says he left CBRE firstly because Cushmans is changing dramatically, heralded by the arrival of new top management Carlo Barel di Sant’Albano as chief executive of EMEA, and secondly, the company’s desire to expand its London business.
“I’d been at CBRE for 17 years and it was time for a new challenge. I’m not very good if I’m not challenged.”
Digby Flower has worked in property for long enough to know that things never stay the same, and lessons will never really be learnt. “You wouldn’t have development if developers weren’t optimists. Nobody ever learns entirely from each cycle,” he says.
Naturally, the eurozone crisis is his primary worry, but he is also optimistic about the TMT boom and what that might mean for the capital’s property market.
“We had a big bang in the financial services sector at the end of the ’80s, we had the dot.com boom in the early ’90s, and now we are moving into the next phase, which is the TMT sector,” he says.
What the eurozone crisis is doing is making occupiers cautious, giving them an excuse to avoid making decisions, he says, and all it will take is a bit of confidence to return.
“When the market starts to improve and a bit of confidence returns there will be a raft of pent-up demand released – that is what happened in 2010 when confidence returned after the credit crunch of 2008,” he says.
The aim is for Cushman & Wakefield to be poised ready to ride that wave when it happens. He predicts the next peak of the market will be 2014-15 or 2015-16 which, he says, ties in very nicely with “our business plan”.
What do London’s top agents think the market will do? Here, the capital’s top three agents from EGi’s London agency league table talk about what keeps them awake at night and whether they have tickets for the Olympics
Neil Prime, head of office agency, Jones Lang LaSalle
Q Which area and sector within London are most likely to see growth?
A TMT is likely to continue to drive the non-core markets. I expect increased migration of West End occupiers to other markets, including Midtown and South Bank, driven by a lack of supply in the West End and seeking greater value. Crossrail will become an increasing focus for occupiers as it draws closer to completion.
Q Hindsight is a wonderful thing. If you’d known in 2008 what you know now, would you have done anything differently?
A Bought shares in Google.
Q When do you see your London business growing and significant recruitment?
A The merger with King Sturge has doubled our London business and headcount. That’s been pretty significant.
Q When do you think the next peak for the London market will be?
A The market always recovers more quickly than most people predict. The lack of supply will support rental growth for a longer-than-expected period until the supply curve catches up, so I think 2014-16 will see the cycle peak.
Q Have you got tickets for the Olympics?
A Yes, opening ceremony and rowing, where we sponsor Alan Campbell, who will be pushing for gold.
Richard Howard, head of West End and central London office agency, DTZ
Q Which area and sector within London is most likely to see growth?
A King’s Cross, Victoria and the South Bank (including Waterloo) will see the most growth because of the huge improvement in stock, and increased quality of occupiers and amenities in all of these locations, and the transport links.
Q Hindsight is a wonderful thing, if you’d known in 2008 what you know now would you have done anything differently?
A Built very good-quality accommodation with large floorplates and not got too hung up on precise location (within reason), and hopefully therefore been able to buy more efficiently. Recent deals have shown that, for the right product, tenants have been a lot more footloose than would have been predictable in 2008.
Q When do you see your London business growing and significant recruitment?
A Our London business is already growing. We are actively engaging with the market to identify and hire quality people to ensure that we maintain the levels of service we provide to our clients. We expect to make announcements shortly.
Q Predict the next peak for the London market.
A Almost impossible to say – for example, who would really have predicted the huge rise in demand from the TMT sector? If this demand continues it could sustain certain locations for much longer than normal market cycles.
Q Have you got tickets for the Olympics?
A We are going to some of the Paralympic events and will be avidly watching the Olympics on the TV.
Adam Hetherington, managing director, central London, CBRE
Q Which area and sector within London is most likely to see growth?
A The TMT sector has seen a significant upturn in activity over the past two years. We expect the sector to continue to record above-trend take-up over the next two years on the back of major active requirements. The insurance sector has also become very active in recent months and this will continue through 2012. Victoria, King’s Cross, Waterloo and London Bridge are delivering new developments that will redefine their respective markets. Waterloo stands out as the location that will benefit most.
Q Hindsight is a wonderful thing. If you’d known in 2008 what you know now, would you have done anything differently?
A At the end of 2008, I would have bought more shares in CBRE.
Q When do you see your London business growing and significant recruitment?
A We continue to grow our business organically and by expanding our service offer into new areas, such as residential. The more challenging market has, arguably, created more opportunities to recruit more quality people into our business and we are always alive to strategic corporate/M&A opportunities.
Q Predict the next peak for the London market.
A At the property level, the recovery will be against the backdrop of relatively limited supply. The beginnings of a resolution to the eurozone crisis, allied to strong corporate balance sheets and high levels of structural demand, should translate through to a strong recovery with the next cyclical peak in 2016-17.
Q Have you got tickets for the Olympics?
A I have tickets for the rowing at Dorney Lake, Eton, and the football final at Wembley but am disappointed I was unsuccessful for tickets to the athletics because I think the atmosphere will be amazing.
